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Jakarta Post

Govt pledges to push down airfares in one week

  • News Desk

    The Jakarta Post

Jakarta   /   Tue, May 7, 2019   /   11:40 am
Govt pledges to push down airfares in one week Coordinating Economic Minister Darmin Nasution. (JP/File)

The government will decide on new price ceilings for airplane tickets within a week to force airlines to lower airfares, after two regulations that had been issued failed to do so, Transportation Minister Budi Karya Sumadi has said

On Monday, Coordinating Economic Minister Darmin Nasution invited Budi, State-Owned Enterprises (SOE) Minister Rini Soemarno and flag carrier Garuda Indonesia’s board of directors for a meeting in Jakarta to reduce the price of plane tickets.

Surging airfares have been blamed for the low occupancy rates of hotels in tourist destinations across the country.

“We have one week to decide on new price ceilings for economic-class airplane tickets. God willing, [we will issue a new policy],” Budi said after the meeting as quoted by tempo.co.

In late March, Budi issued two regulations in the form of Transportation Ministerial Regulation No. 20/2019 on airfares for domestic commercial airlines and Ministerial Decree No. 72/2019 on airfare ceilings, which is a derivative regulation of the former. However, the regulations failed to force airlines to cut their ticket prices.

Budi emphasized that the policy was made after considering the people’s purchasing power. It was decided during a meeting with Darmin that the new price ceilings will be for economic class tickets from both full-service and low-cost carriers, he added.

Transportation Ministry air transportation director general Polana B Pramesti said the discussion on new airfare ceilings would involve officials of the SOE Ministry.

She stressed that as a regulator, the government would not be allowed to set airfares because they should be based on market mechanisms. But based on prevailing regulations, the government could regulate the price floors and ceilings of plane tickets. (bbn)